4th Circuit: In re Jackson - Debtor is Entitled to the Full Means Test Deduction under National or Local Standard

Summary: The Bankruptcy Administrator moved to dismiss the Debtors case arguing that on the Means Test they were limited to deduction of the lesser of either the actual mortgage and vehicle expenses or the amounts under the applicable National or Local standard. In affirming denial of this motion by the the bankruptcy court, the Court of Appeals held that based on the plan language of 11 U.S.C. § 707(b)(2)(A)(ii)(I) “[t]he debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards.” 11 U.S.C. § 707(b)(2)(A)(ii)(I) (emphases supplied). In addition to the unambiguous application of the statutory language, the Court held that a contrary result would create the absurd result of “punishing frugal debtors”, by encouraging them to incur secured debts up to the amounts under the standards. Commentary: In Footnote 5, this opinion also provides instructions for certification of issues for direct appeal under 28 U.S.C. § 158(d)(2)(A) and Bankruptcy Rules 8002 and 8006. For a copy of the opinion, please see: Jackson - Debtor is Entitled to the Full Means Test Deduction under National or Local Standard